How to Choose a Small Business Health Insurance Plan
As a small business owner, choosing health insurance is important. It helps you grow your company and invest in your employees. You also need to keep your budget in mind.
“This is an important decision, but it doesn’t have to be complicated,” said Jordan Anderson, Senior Director of Group Sales at Avera Health Plans. “There are three basics of insurance: plan types, networks and available value-added benefits. The final factor is deciding how much you want to contribute to premium benefits.”
Here’s a guide to get you started.
Does Your Company Need to Offer Health Insurance?
That depends on your size. Companies of 2-50 are not required to offer health insurance. However, it can help you remain competitive as an employer. Companies of 50 or more employees are required as part of the Affordable Care Act (ACA) to offer health insurance benefits to full-time employees.
The number of plan options you can offer is also based on your size.
What Are Employer Options to Offer Insurance?
For small employers your options fall into two main categories:
Small businesses can deduct the cost of premiums from their taxes. They may also qualify for special tax credits for health insurance.
If you opt not to offer a group plan, employees can go to the federal Marketplace to get insurance. You can offer a stipend to help cover the premium costs. A stipend is taxable income for the employee, and employers must also pay payroll taxes on the stipend.
In this situation, employees would not receive premium tax credits that could be available on the federal Marketplace.
How Much Will Health Insurance Cost My Company?
Plan costs differ based on the plan type you offer. The differences in deductible, co-pay, coinsurance, and out-of-pocket maximum will affect the cost of each plan.
You can also decide how much you want to contribute to help cover employee premium costs. Small group employers typically cover at least 50% of the premium for their employees.
Employee gender and current and past medical history will not affect how much you pay for health insurance.
Get Started
Take the next step and request a quote for business health insurance or call us to find an agent and help you navigate the process.
Get Quote 605-504-3362
Types of Health Insurance Plans and Networks
Traditional co-pay plans include co-pays, deductibles and coinsurance for visits, drugs and services until the member reaches their out-of-pocket maximum.
High-deductible health plans (HDHP) have lower premiums. However, employees must pay the full cost of visits, services and drugs until the deductible is met. Then there may be some cost-sharing.
Affordable Care Act-compliant insurance plans offer 10 essential benefits. Preventive services, like yearly checkups, vaccinations and recommended cancer screenings are covered at 100%, whether traditional or high deductible.
Choosing a Network
The next step is to choose the type of network you want to offer. You’ll want to get an idea of what health care providers are available in your area. Consider how wide of a network your employees would prefer.
At Avera we have two types of networks:
The Avera Health Plans Network includes Avera and other independent providers and facilities in South Dakota and northwest Iowa.
The Avera Direct Network features Avera owned, managed and leased providers with a lower premium cost. It’s available to employers headquartered in Brown, Lincoln and Minnehaha counties in South Dakota. This network provides zero out-of-network coverage, except for urgent and emergent care.
Beyond these two local networks, consider the extended network. This ensures coverage when employees are traveling, or if a dependent is a student outside the network. Consider which plans can use the extended network. For instance, Avera Direct plan members do not have eligibility to use the extended network.
Avera Health Plans uses the UnitedHealthcare extended network, which includes 1.3 million providers nationwide.
Why Is it Important to Offer Health Insurance?
The simple answer is what’s good for your employees is good for your business.
Employees consider health care benefits an important feature offered by their company. Studies and surveys indicate that healthy employees are more productive at work and are absent less.
“The most important thing is to take action to protect the health of your employees and company,” Anderson said. “Over time it can make a real impact on employee health but also provides peace of mind that they’re covered if something unexpected happens.”
What to Know About Pharmacy Coverage
Prescription drugs are considered an essential benefit but there are still variations to consider.
Insurance providers work with a pharmacy benefits manager that will determine the network of pharmacies your employees can use. Avera Health Plans Rx, for instance, offers employees access to most local pharmacies, more than 56,000 online pharmacies and transparency tools to cut medication costs.
Plan types can affect out-of-pocket costs for the employee starting with whether a co-pay and coinsurance will be charged. Avera Health Plans offers tiered pharmacy coverage. This means your co-pay or coinsurance for a drug can vary based on the tier it falls under.
What Wellness Benefits Are Important for Employees?
Many employees value wellness benefits beyond basic coverage that help them reach their well-being goals and maintain health. These are separated into two main areas. Ancillary products are things you must opt in with an added cost. Value-added services and benefits are things your employees get with their basic health insurance coverage.
Value-Added Services
- Fitness center membership discounts through our ActiveLife program at all GreatLIFE Fitness Clubs.
- 24/7 Avera Health Plans Virtual Visits for urgent and behavioral health care needs
- Access to Employee Assistance Program (EAP)
- Heart and vascular screenings through Avera Planet Heart
- LiveNOW health coaches and fitness tracking
- Dental insurance
- Vision insurance
- Short-and long-term disability
- Employee Assistance Program
- Critical illness
- Life and Accidental Death & Dismemberment (AD&D) insurance
Ancillary Products
- Dental insurance
- Vision insurance
- Short-and long-term disability
- Employee Assistance Program
- Critical illness
- Life and Accidental Death & Dismemberment (AD&D) insurance
Additional Resources
Still gathering information? These resources will help.
Too long; didn’t read: As a small business, you can pay your employees a stipend to get their own coverage or offer employer insurance. If you opt for employer health insurance, look at the plan types, provider network options and wellness benefits.
